Ezel / Tax Rulings / TX
TX 9102L1078G01 Motor Vehicle Tax 1991-02-27

Did using 45 titled trailers as collateral for a loan trigger Texas motor vehicle tax?

Short answer: No. The company borrowed about $125,000 on a three-year payment plan and pledged 45 trailers, but title remained in the company's name. Because the vehicles merely secured a loan and title did not change, the agency found no sale and no motor vehicle tax due.

Apply this to your situation

This page answers the general question as of 1991. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1991
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Texas Tax Administration letter dated February 27, 1991; STAR metadata lists February 1, but the printed date controls here. Its no-tax conclusion depended on the trailers serving only as loan collateral and title remaining in the same company's name. It predates modern Private Letter Ruling reliance terms and cannot bind the Comptroller for unrelated taxpayers. Secured-transaction, title, sale, and motor vehicle tax rules may have changed. The $125,000 amount, 45 trailers, and three-year plan are facts of this transaction only. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

A company borrowed approximately $125,000 from a national lease company on a three-year payment plan and used 45 trailers as collateral. The trailers remained titled in the borrower's name.

The Texas Tax Administration Division found no motor vehicle tax transaction. Using vehicles to secure a loan while title remained unchanged was not a sale, so no tax was due.

What this means for you

Commercial borrowers and secured lenders

The letter's result depended on unchanged title and a collateral-only transaction. A transfer of title or different transaction structure could change the analysis.

Common questions

Q: Did pledging the trailers count as a sale?

A: No.

Q: What fact was central to the result?

A: Title remained in the same company's name.

Citations and references

  • The letter cited no statute or administrative rule by number.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

JOHN SHARP
Comptroller February 27, 1991

Dear ** :

This is in response to your recent letter requesting a written opin-
ion regarding the taxability of a business transaction.

You stated in your letter that COMPANY M has borrowed approximately
$125,000 from a national lease company using 45 of your trailers as
collateral on a three year payment plan. The trailers remain titled
in the name of COMPANY M.

When vehicles are used as collateral to secure a loan, and the title
remains the same, a transaction subject to motor vehicle tax has not
occurred. A sale has not occurred and tax is not due.

This opinion is based on the facts presented. If there are addition-
al or different facts, the opinion may change.

If you have any questions or need additional information, you may
call me toll free at 1-800-531-5441, extension 5-0330. The regular
number is 512/463-4600, or write me at Tax Administration Division.

Sincerely,
Bettie U. Peterson
Tax Administration Division

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